Tyler, Inc., is considering switching to a new production technology. The cost of the required equipment will be $3,727,533 . The discount rate is 12.86 percent. The cash flows that the firm expects the new technology to generate are as follows. Years CF 0 $(3,727,533) 1–2 0 3–5 $874,667 6–9 $1,546,005 a. Compute the payback and discounted payback periods for the project. b. What is the NPV for the project? Should the firm go ahead with the project? c. What is the IRR, and what would be the decision based on the IRR?
Tyler, Inc., is considering switching to a new production technology. The cost of the required equipment will be $3,727,533 . The discount rate is 12.86 percent. The cash flows that the firm expects the new technology to generate are as follows. Years CF 0 $(3,727,533) 1–2 0 3–5 $874,667 6–9 $1,546,005 a. Compute the payback and discounted payback periods for the project. b. What is the NPV for the project? Should the firm go ahead with the project? c. What is the IRR, and what would be the decision based on the IRR?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Tyler, Inc., is considering switching to a new production technology. The cost of the required equipment will be $3,727,533 . The discount rate is 12.86 percent. The cash flows that the firm expects the new technology to generate are as follows.
| Years | CF | |
| 0 | $(3,727,533) | |
| 1–2 | 0 | |
| 3–5 | $874,667 | |
| 6–9 | $1,546,005 |
a. Compute the payback and discounted payback periods for the project.
b. What is the
c. What is the
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